PRODUCTS AND SERVICE DESIGN

4
INTENDED LEARNING OUTCOMES

By the end of the learning experience, students must be able to:

1. Describe the importance of production to organizations;
2. Explain the steps of product development to daily business operations and employ the
diverse nature of process to organizations;
3. Discuss the nature and importance of manufacturing to organizational operations and
interpret its characteristics;
4. Describe and practice the vitality of service design;
5. Demonstrate and evaluate service operations used by organizations and explain its
characteristics; and
6. Explain and assess the challenges faced by operations managers.

A. PRODUCTION PROCESS

The way that businesses create products and services is known as the production
process. A firm must purchase all the necessary inputs and then transform them into the
product (outputs) that it wishes to sell. For instance, a football shirt manufacturer must buy the
fabric, pay someone for a design, invest in machinery, rent a factory and employ workers in
order for the football shirts to be made and then sold.
How well-organized a firm is at undertaking transformation process will determine its
success is known as the productive efficiency of a firm and it will want to be a sufficient as
possible in transforming its inputs into outputs (i.e., using the minimum number of inputs as
possible to achieve a set amount of output), this will reduce the cost per unit of production and
allow the firm to sell at a lower price.
Ultimately, the objective of the production process is to create goods and services that
meet the needs and wants of customers. The needs and wants of customers will be met if a
business can produce the correct number of products, in the shortest possible time, to the best
quality and all at a competitive price.
Products are goods and services produced and processes are the facilities, skills and
technologies used to produce them. Production processes are essential to produce products and
the available processes limit what products can be produced. Production or operations function of
an industrial enterprise is also known as conversion process or transformation process which
transforms some of the inputs into outputs which are useful for the consumers.

Types of Process
• Process Technology: Equipment, people, and systems used to produce a firm’s products
and services.
• Project Technology: A process technology suitable for producing one of a kind product.
• Job Shop Technology: A process technology for a variety of custom-designed products
in small volumes.

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 Steps in Product Development

STEP 2 STEP 3
STEP 1
Advance product Advance design
Needs identification
planning

STEP 5
STEP 6 STEP 4
Production process
Product evaluation Detailed engineering
design and
and improvement design
development

STEP 7
Product use and
support
Figure 4.1. Steps in product development

• Batch Technology: A process technology suitable for a variety of products in varying

volumes.
• Assembly Line Technology: A process technology suitable for a narrow range of
standardized products in high volumes.
• Continuous Flow Technology: A process technology suitable for producing a continuous
flow of products.

B. MANUFACTURING OPERATIONS

Manufacturing operations or processes convert inputs into tangible outputs.

Manufacturing processes are primary processes and can be grouped under three basic categories,
viz., forming, Machining and Assembly.
Forming includes casting, forging, stamping, embossing, spinning etc. Machining includes
metal removal by turning, drilling, milling, grinding, shaping, boring etc, it also includes chip less
machining processes such as electrodischarge machining (EDM), electromechanical machining
(ECM), chemical milling, laser drilling etc. Assembly processes includes joining of parts, i.e.,
welding, riveting, fastening with bolts and nuts and joining by use of adhesive.
Objectives of Manufacturing Operations are as follows:
• To give tools and advices for establishing manufacturing processes
• To show some alternative methods for reducing the cost of the manufacturing
process
• To show how to estimate manufacturing cost and running cost of any
manufacturing process.
Characteristics of Manufacturing
• Specialization: Specialization means division of work or effort and this operates both at
workers and management level. The result of specialization is low cost of production and
improved quality. At management level the efforts are divided into various special
functions such as Research and development, design, engineering, finance, accounting,
sales, purchase, personnel, maintenance etc.
• Mechanization: Mechanization replaces human labor by machine power. The human skill
is transferred to machine tools which carryout various manufacturing operations.
Advanced form of mechanization is known as Automation
• Use of Technology of Industrial Engineering: Industrial engineers have been able to

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 devise improvements and to increase productivity by elimination of waste and
inefficiency, thereby increasing production and reducing costs.
• Use of Computers and Data Processing Equipments: Widespread use of computers in
manufacturing industries has made possible, the handling of enormous amounts of data
and the solving of complex mathematical problems at high speed. The range of
application of application of computers include product design, control of manufacturing
process, production and inventory control, quality control, maintenance control etc.
• Use of Scientific Methods: Industrial engineering, operations research or management
science involves quantitative methods and techniques to solve both engineering and
managerial problems. Operations research is an aid in decision making based on
quantitative analysis.

OPERATION 1

Raw Materials: Collect and store the raw materials: Scrap or sponge iron: Where we get it,
at what price, how we store it, what quality is usually needed, how many people do we put on
this task: Salary, outsourcing, qualifications, safety regulations and so on.

OPERATION 2

Melting: Sponge iron is melt in an electric arc furnace: What is the cost of the furnace, where
do we implement it, What is the cost of the energy, how many people on this work station,
how many quantities can we manage in one hour and how many quantities do we get by the
end?

OPERATION 3

Refining: The melting metal is refined. It means that we separate the chemical elements in
order to get the specific steel we need. How do we operate this separation, qualifications
Casting:
wanted, DoThe liquidasteel
we need is cast
chemist forincontrolling
products such as billets: A new list of questions
the process?
OPERATION 4

OPERATION 5

Rolling: The billets are heated at 1200c and then rolled in order to get the plates: A new list
of question
Figure 4.2. Operation processing

A. SERVICE DESIGN

Service design begins with a business strategy and service strategy. The business strategy
defines what business the firm is in, for example, the Walt Disney Company defines its business
strategy "as making people happy." A business strategy also defines the target market,
competitors, financial goals, new products, how the company competes, and perhaps some
aspects of operations.

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 Following from the business strategy is the service concept. It must provide the rationale
for why the customer should buy the service offered. It defines what the customer is receiving and
what the service organization is providing. The service concept includes:
1. Organizing Idea. The vision and essence of the service.
2. Service Provided. The process and results designed by the provider.
3. Service Received. The customer experience and outcomes expected.
Managers can use the service concept to create organizational alignment and develop
new services. It provides a means for describing the service business from an operations point of
view. After defining the service concept, operations can proceed to define the service-product
bundle (or service package) for the organization. It consists of five parts: service facility,
facilitating goods, information, explicit service and implicit services. It is important to carefully
define each of these elements so that operations can subsequently design and manage a service
operation. The service-product bundle must come first before operations decisions. An example
of service-product bundle characteristics follows:
• Service Facility: Accessible by public transportation, sufficient parking, interior
decorating, architecture, facility layout and traffic flow.
• Facilitating Goods: Sufficient inventory, quality and selection
• Information: Is it accurate, up-to-date, timely, and useful to the customer and service
providers
• Explicit Service: Waiting time, training and appearance of personnel, and consistency
• Implicit Service: Sense of well-being, privacy and security, atmosphere, attitude of
service providers.

Once the service package is specified, operations are ready to make decisions concerning
the process, quality, capacity, inventory, and supply chain and information systems. These are the
six decision responsibilities of service operations. Other decision responsibilities such as market
choice, product positioning, pricing, advertising and channels belong to the marketing function.
Finance takes care of financial reporting, investments, capitalization, and profitability.

Service Operations
Service operations or non-manufacturing operations which also convert set of inputs into
set of outputs which are intangible, it can be classified into standard services and custom services
according to degree of standardization of their outputs and /or the processes they perform, such
as wholesale distribution and freight transportation etc.
An operation does not necessarily provide only service or only goods. Facilitating goods
may be provided with services and facilitating services may be provided with goods, for example,
servicing automobiles may include the replacement of some parts.

Characteristics of Service Operations

• Perishability: It means the service cannot be inventoried or stored. Most services,
because they are simultaneously produced and consumed are considered as
perishable.e.g. Hotel rooms, seats on an airplane or in movie theatre cannot be stored and
retrieved for later use.
• Inseparability: Inseparability refers to the simultaneous production and consumption of
services. Goods can be produced and then sold later whereas services cannot. They can
consume only when they are produced.
• Variability: Variability refers to the unwanted or random levels of service quality
customers receive when they patronize a service because of the human element involved
in providing a service. Various service employees will perform the same service differently
and even the same service employee will provide varying levels form one time to another.

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 Table 4.1. Differences between Manufacturing and Service Operations

MANUFACTURING OPERATIONS SERVICE OPERATIONS

Productivity can be measured. It is uncommon to measure the
productivity.
Outputs are tangible in nature. Outputs are intangible in nature.
Quality standards are easily established. It is difficult establish quality standards
in Service operations
Less customer contact with person Customers have more contact
who is involved in manufacturing with persons who provide
process. services.
In continuous production of standard In service operations, it cannot
products, it can accumulate or decrease produce outputs that can be stored
inventory of finished products. because they are intangible in
nature.
The proportion of expenses The proportion of expenses in
required for material handling is services operations is very less.
more.
Investment in assets such as facilities, Investment in assets and inventory is
equipments and inventory are higher. less as compared to manufacturing
operations.
These are depending more heavily on In service operations the
maintenance and repair works. maintenance
is not required as the services are
intangible.
MO having longer lead times. SO having shorter lead times.
These are capital intensive These are labor intensive

D. CHALLENGES FACED BY OPERATIONS MANAGERS

The key challenges facing service operations managers are:
• Managing Multiple Customers: Many service organizations often serve heterogeneous
group of customers, indifferent ways and different types of customers. Understanding
who the curious customers are, understanding their needs and expectations, developing
relationships with them and managing the various customers are key tasks for service
operations managers.
• Understanding the Service Concepts: There may be differing views about what service
an organization is selling and / or the customer is buying. Articulating and communicating
the service concept is critical for classifying the organization service product to all its
customers and for ensuring that it can be delivered to customer specification.
• Managing the Outcome and Experience: For many services, there is no clear boundary
between experience and the outcome. E.g. customers in a restaurant are buying both the
meal and the way they are served. The intangible nature of the experience provides
particular problems for both specification and control.
• Managing the Real Time: Many services happen in real time. They cannot be delayed or
put-off .e.g. aircrafts coming into land cannot be put on hold while controllers take a
break. Also, during a service encounter, it is not possible to undo what is done. In
manufacturing operations it is possible to scrap defective products and remake them, but
in service operations it is not possible to undo defective service rendered to a customer.
• Knowing, Implementing and Influencing Strategy: Operations which are they doing
part of the business are also responsible for implementing strategy of the service

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 organization. Service operations managers must understand their role, not only in
implementing strategy but also in contributing to it or influencing the strategy. Service
operations managers need to provide platform for their organizations for competitive
advantage through competence in service operations.
• Continually Improving Operations: Service operations managers are faced with a
challenge of how continually to improve and develop their real improvements. They
should manage the increased complexity resulting from change and also improve
efficiency as well as quality of service operations.
• Encouraging Innovations: Innovation looks for what is new rather than improving the
existing service operations usually requires elements of financial risk because innovations
require time and money and personal risk for service managers champion change putting
their reputation on the line.
• Managing Short Term and Long Term Issues Simultaneously: Organizations are under
pressure to perform in the short term which leaves little time for medium term operational
improvement or long term strategic planning. Many service operations managers focus
their time and effort on managing day to day operations to ensure the delivery of an
appropriate quality of service operations management is frequently neglected.

References

Anil Kumar, S and N. Suresh. (2009). Operations Management. New Age International (P) Ltd.,
Publishers. New Delhi. Retrieved from
http://182.160.97.198:8080/xmlui/bitstream/handle/123456789/436/Operations_Management%2
0-%20Kumar%20A%20A%20and%20Suresh%20N.pdf?sequence=1

Lovely Professional University. (2012). Production and Operations Management. Retrieved from
http://ebooks.lpude.in/management/mba/term_3/DMGT501_OPERATIONSMANAGEMENT.pdf

Slack, N., Brandon-Jones, A. and Johnston, R. (2013). Operations Management. 7th Edition.
Pearson Education Limited. Retrieved at
https://colbournecollege.weebly.com/uploads/2/3/7/9/23793496/operations_management_by_sl
ack_nigel_7th.pdf

Stevenson, W. J. (2012). Operations Management. 11th Edition. McGraw-Hill/Irwin. New York.

Retrieved from https://baixardoc.com/documents/operation-management-by-william-j-
stevenson-11th-edition-shuvo--5cf6d512051d3

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